Cash grain basis mixed

Corn and soybean futures continued to consolidate at lower prices this week but remained poised above the lows established in late June.

For corn, traders continue to focus on weather maps, but any late season heat at this point in time will likely do little to impact crop yields. Most traders expect somewhere around trendline yields for corn. Soybeans, on the other hand, have the critical growing season in front of them, so weather concerns will dominate.

Corn basis for the week was mixed, with sections of Nebraska and South Dakota seeing basis gains of 3 cents or more. Drought concerns in these areas are limiting farmer sales of old-crop corn which has helped give a lift to old-crop basis levels. In the Eastern half of the U.S. basis levels were under pressure as losses were common from Illinois through the Eastern Seaboard. Some basis gains were also noted in the Upper Mississippi region as barge took a slight dip mid-week, but the prospects of any long-term declines in barge rates seem limited.

For soybeans, basis levels also gained ground in Nebraska and South Dakota as well as parts of Minnesota and Wisconsin. However, basis levels in the East managed to inch higher as well.

Old-crop forward contracting opportunities remain fairly limited especially for corn. Carrying premiums between now and September are only 2 cents a bushel, not enough to warrant storage. However, if you can carry old-crop corn into fall harvest the average forward contract is paying 10 cents over spot delivery, about 5 cents a month which may be worthwhile. In soybeans, the average carry to fall 2006 is 11 cents a bushel.

Expect basis levels to remain mostly steady to slightly higher in the West, but the East could come under pressure as farmers start to make room for a good fall crop.

Corn and soybean futures continued to consolidate at lower prices this week but remained poised above the lows established in late June.